16 Karnali Highway contracts terminated as road works remain incomplete

Road infrastructure projects along Nepal's Karnali Highway are facing prolonged delays and widespread contract failures, leaving key sections in poor condition and disrupting daily travel for local communities. Years after repeated repair efforts and public investment, large stretches of the highway remain incomplete, with contractors failing to deliver despite extensions, advance payments, and official warnings.

The situation has forced authorities to cancel dozens of stalled contracts in recent months, exposing persistent issues in public procurement and project execution along one of Nepal’s most difficult highway corridors. The Road Division Office in Jumla has cancelled 16 long-stalled contracts along the Karnali Highway after construction companies repeatedly failed to complete work.

One major cancellation involves MK/Amit JV, which was awarded a contract in February 2020 to repair blacktopped sections in Kalikot district for Rs 33.8 million. The company received an advance payment of Rs 8.1 million but failed to reach 20 percent completion even after two deadline extensions, prompting authorities to terminate the agreement. A second contract for maintenance works on the Dahikhola–Serighat section also collapsed after the firm, which secured Rs 32 million, failed to complete even 30 percent of the work.

Officials say a pattern of contractors securing public works but failing to deliver has become persistent in the region. The office has begun procedures to blacklist several firms, seize bank guarantees and deposits, and recover advance payments with 10 percent interest. Among the cancelled contracts are four held by MK/Amit JV and three by Kalikot-based Karnali Construction and Engineering. Other terminated projects include a Bailey bridge construction contract and road maintenance works.

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We cancelled the contracts after contractors showed no interest in completing the work despite repeated reminders. We have now terminated 16 projects, including 12 in Kalikot, three in Jumla and one in Mugu.